- 9 лет ago
- Published в: Stampa su forex charts
- 1
- Автор: Macage
On the other hand, theories under the second group emphasize that firms can engage in hedging activities for managerial reasons such as managerial lack of diversification and avoiding capital market disciplining. In particular, Stulz and Smith and Stulz argue that because of their relatively undiversified financial and human capital tied to their firms' well-being, risk-averse managers have incentives to lower firm risk through hedging.
Managers will prefer corporate hedging to individual hedging if the former method is less costly to them. Consistent with this hypothesis, I use the natural log of the dollar value of managerial shareholdings log dollar inside ownership in the firm to proxy for the degree of managerial lack of diversification and expect a positive coefficient on this variable as in Tufano Several papers also use the number of exercisable options held by managers to proxy for the risk-taking incentives of managers.
I cannot use this variable in the analysis due to data limitation. However, I use managerial vega and delta values to proxy for managerial risk preferences in a sample of U. Several theories also link corporate hedging to managerial career and reputation concerns [DeMarzo and Duffie and Breeden and Viswanathan ].
Hedging can reduce the noise associated with performance measures to the extent that it lowers firms cash flow volatility. As a result, hedging can reduce the degree of informational asymmetry among managers, shareholders, and the labor market. This argument implies that managers with superior skills may engage in hedging to better communicate their skills to the labor market. Managers can also hedge to avoid capital market disciplining imposed by external financing.
Tufano argues that hedging can allow managers to freely pursue their pet projects by providing access to internal financing in more states of the world. Unfortunately, there are no conventional measures of managerial incentives to hedge for career concerns and avoiding market disciplining. Therefore, I focus on the theories of Stulz and Smith and Stulz in this group of theories. In testing these hedging theories and the role of corporate governance, I control for the existence of other means of financial hedging.
Convertible debt can reduce bondholder-related agency costs and thus may substitute for derivatives. I expect a negative relationship between convertible debt scaled by total assets convertible debt ratio and hedging activities. I also control for dividend payments dividend yield as firms with greater dividend payments may need more financing. Although I expect a positive sign on this variable consistent with Gezcy et al. Other than these factors, I control for firm size because the establishment and implementation of a hedging program involves some fixed costs.
I expect a positive coefficient on firm size measured by the logarithm of total assets log assets. The coefficient on GDP per capita can have either a positive or negative sign. Derivatives are used as a proxy for firms' hedging activities when testing these theories and by doing so, firms are assumed to use derivatives always for hedging.
However, firms can also use derivatives to selectively hedge and actively speculate. Indeed, there is anecdotal evidence showing that managers allow their subjective market views to influence their use of derivatives, that is, they selectively hedge. In a survey of large American firms, Bodnar et al. In sum, using this imprecise proxy for corporate hedging activities can create significant amount of noise in testing hedging theories and result in inaccurate estimates.
The strength of corporate governance can influence why firms use derivatives in two ways. Since most non-financial firms have no comparative advantage in profitably engaging in currency speculation, they should hedge their currency exposure as long as the benefits of hedging exceed its costs. Leland shows that using derivatives for speculation produces substantially lower benefits for firms than for hedging in his model. Such non-value-increasing use of derivatives will probably not take place in firms with strong governance mechanisms.
A strong governance environment ensures a more effective monitoring of managerial activities and as a result a greater likelihood of penalizing managers for any improper use of derivatives. Hence, I hypothesize that strongly governed firms are less likely to use derivatives for speculation or selective hedging. Strongly governed firms, on the other hand, will hedge their currency exposure regardless of their expectations on future currency parities.
This impact of governance on firms' motives to use derivatives will be reflected in tests as a positive non-positive coefficient on the degree of currency exposure in firms with strong weak governance on average. Consistent with the literature, I use the ratio of foreign sales to net sales foreign sales ratio to proxy for the firm-level currency exposure [see Jorion and Allayannis and Ofek ].
Firms in these models always hedge in the best interest of shareholders. However, when there is a conflict of interest between shareholders and managers, firms' hedging practices can significantly differ. In particular, managerial utility-maximizing hedging theories identify managerial incentives to hedge, which could be aligned or not with shareholders' best interests.
Weak monitoring of managerial activities provides managers with a greater discretion over the use derivatives for their own interests. For example, these managers have more freedom in using derivatives to reduce the risk of the firm, which can be beneficial to managers at the expense of shareholders.
The reduction in the firm-specific component of risk from hedging does not have as significant impact on well-diversified shareholders' wealth as it does on managers' wealth [Stulz and Smith and Stulz ]. Thus, managers have incentives to engage in hedging even if it is costly to shareholders. In general, assuming strongly governed firms are more likely to make value-maximizing decisions, I hypothesize that they are also more likely to use currency derivatives consistent with the value-maximizing theories of hedging.
On the other hand, managerial self-interests are more likely to subsume other incentives in weakly governed firms in using currency derivatives. Data and Sample Construction This paper analyzes the derivative-related activities of foreign firms that cross-list in the U. GAAP rules in their annual reports. This sample contains foreign firms after excluding financial institutions and utility firms.
I also exclude firms with unavailable financial data and F forms. This screening reduces the sample size to firms. I then exclude ADRs with incomplete data in Compustat tapes and those reside in tax heavens such as Bermuda and Luxembourg. The final sample contains 1, firm-year observations from 34 countries. It is an unbalanced panel set of firms.
All the firms in my sample indicate that they use derivatives for hedging purposes. I also hand-collect detailed firm-level governance data from F forms and proxy statements. These differences are particularly challenging when examining foreign firms' hedging activities since the disclosure of information on the use of derivatives is voluntary in most countries.
Another advantage of using ADRs is that they are likely to have greater access to hedging instruments than their local counterparts. Therefore, my tests are less affected by the aspect that foreign firms do not hedge due to the unavailability of such instruments. The disadvantage of using cross-listed firms as representatives of firms in their respective countries is that they may have different characteristics than their local counterparts.
For example, cross-listed firms have lower controlling shareholder and managerial agency costs since they become subject to the U. Such features of ADRs can influence my ability to detect a relationship between corporate governance mechanisms and hedging activities.
It is also important to note that Allayannis et al. Nonetheless, I provide robustness tests in which I attempt to control for this potential bias. Measures of Corporate Use of Derivatives Consistent with the empirical literature, I use gross notional amounts of currency derivatives scaled by total assets FX hedge ratio as a measure of corporate currency hedging activities [e.
This variable is censored below zero by construction. Scaling notional amounts by net sales and foreign sales yields qualitatively similar results but using total assets as the denominator results in a larger sample size. Firms can have offsetting or aggregated derivative positions and some of these positions have nonlinear payoff structures.
As a remedy to a possible mismeasurement of firms' derivative positions, I use firms' decisions to use currency derivatives FCD user as an alternative measure of hedging activities. I also consider the use of foreign denominated debt as an alternative strategy to manage currency risk. Measures of the Strength of Corporate Governance Mechanisms I define corporate governance in ex-post terms, i. I use two governance indexes to measure the strength of corporate governance. The first measure is a firm-level internal governance index, constructed using the methodology of Gompers, Ishii, and Metrick This index is comprised of seven governance measures hand-collected from ownership and board structures, all of which are drawn from the corporate governance literature.
The second measure is an external country-level governance index. It is the common factor derived from a principal components analysis of six measures of country-level governance mechanisms that are highly correlated with each other. All six governance mechanisms are drawn from the governance literature. First, it provides an alternative measure of how strictly managerial activities are monitored. Second, it is potentially less endogenous to hedging policies and other corporate financial policies.
Legal environment is highly correlated with the degree of financial market development as evidence suggests. This index may subsume the impact of financial market development on corporate hedging activities if not controlled. Hence, I orthogonalize this index with GDP per capita. The correlation coefficient estimate between the country-level governance index and GDP per capita is 0. The governance indexes above are only imperfect measures of the strength of governance; unfortunately, a perfect measure does not exist.
I attempt to mitigate the potential mismeasurement of the strength of governance by employing three different governance indexes, the two indexes above for the ADR sample and the Gompers et al. These indexes are good proxies to the extent that they are positively correlated with the overall strength of governance.
I conduct tests to check the credibility of the manually constructed indexes. In particular, I test whether the governance indexes I created affect firm value. The literature suggests that firms with strong governance should have a higher firm value [e. Accordingly, I regress the market-to-book ratio on the governance indexes separately while controlling for the other determinants of firm value such as stock return volatility, capital expenditures-to-assets ratio, debt-to-assets ratio, log assets, multi-segment dummy, dividend yield, GDP per capita in addition to industry, year, and country dummies.
I find a positive and statistically significant coefficient on both governance indexes, consistent with the literature. Thus, the governance indexes appear to capture the strength of governance environment. In addition, I test whether the estimated coefficients on the individual components of this governance index are jointly zero in a regression of the market-to-book ratio on the index components while controlling for its other determinants.
The results from an F-test separately estimated for the components of firm-level and country-level governance indexes show that they are significantly different from zero at one percent. Results from these valuation tests and other unreported tests are available upon request. As an additional robustness check, I examine not only the impact of these governance indexes on firms' use of derivatives but also the impact of each individual firm-level and country-level component of firms' use of derivatives.
This detailed analysis serves as a robustness test that results are not driven by a potentially superficial effect of indexing. I find that most of these components affect firms' use of currency derivatives in a way similar to the governance indexes. I report the regression results in the paper only for the three indexes due to space limitations.
I also test the impact of the levels of share ownership held by different types of large shareholders instead of the dummy variables and obtain similar results. Results Descriptive statistics for the entire sample of firms are reported in Table 2. Specifically, panel A provides the distribution of currency derivative usage across countries. The UK has the largest number of observations with The percentage of currency derivative users is For example, the mean FX hedge ratio is 0.
Similarly, the percentage of American and German firms that use currency derivatives is This table also shows that there is a considerable variation in firms' use of currency derivatives across countries. Over 95 percent of the observations in Norway are labeled as currency derivative users whereas this percentage drops to around 20 percent for firms in Mexico.
Among countries with at least 20 observations, FX hedge ratio ranges from 0. Panel B reports mean and median values of variables with respect to firms' use of currency derivatives and results from a Wilcoxon test of the differences in medians.
The sample for the median tests is limited to the year that firms cross-listed in the U. Median test results show that on average firms with strong firm-level and country-level governance mechanisms, firms in countries with a greater level of GDP per capita, larger firms, and firms with greater leverage ratios are more likely to use currency derivatives. These results are mostly consistent with previous studies and the hypotheses that currency derivative usage is related to corporate governance and other firm and country specific variables, except for the market-to-book ratio, which is expected to be greater for firms using derivatives.
The Pearson correlation matrix for the main variables is displayed in Table 3. Again, I limit the sample to the year of cross-listing in the U. The pair-wise correlations are generally low. Correlations between the dollar value of managerial share ownership with other variables are moderate, pointing to a potential endogeneity between inside ownership and corporate financial policies.
I start the regression analysis of firms' currency derivative usage by examining the impact of governance on why firms use derivatives. The main empirical specification I use is a pooled time-series cross-sectional Tobit regression. I use a fixed country effects specification to account for unobserved cross-country variation in firms' use of derivatives. This approach assigns a constant term that is specific to each country and therefore is designed to test for variation in derivative usage within a country.
I include GDP per capita in regressions to control for unobserved country-specific time-varying differences in derivative activities that fixed country effects cannot capture. Further, each regression includes year dummies to control for time effects and industry dummies based on 2-digit SIC codes to account for industry effects in addition to country dummies.
Table 4 presents the impact of the strength of firm-level governance on firms' use of currency derivatives. The dependent variable in these regressions is FX hedge ratio. I report both Tobit coefficient estimates and marginal effects. Firms scoring greater than four the sample median value in the governance index are put into the strong governance subsample and the rest are included in the weak governance subsample. Although partitioning of the sample with respect to the strength of governance may seem arbitrary, working with subsamples reduces the severity of any potential endogeneity between governance, hedging, and other financial policies.
Results obtained from interacting the governance index with key variables of interest are reported in Appendix A and are very similar to those obtained from sample partitioning. The coefficient on the foreign sales ratio is positive and statistically significant at five percent. This finding suggests that strongly governed firms with a greater degree of currency exposure use currency derivatives to a greater extent, consistent with the use of derivatives for hedging currency risk. These firms seem to restrict the degree of currency risk bearing because they cannot predict future currency rate movements better than financial markets.
This positive correlation between currency derivative usage and currency exposure is also consistent with the notion that greater disclosure within the firm associated with strong governance increases the ability of managers to identify and effectively mitigate currency exposure.
Further, there is a positive and statistically significant relationship between leverage and extent of hedging, which is consistent with the theory [Smith and Stulz ] and empirical findings [e. Firms with greater expected financial distress costs use currency derivatives to a greater extent. This model also shows that the coefficient on the market-to-book ratio is positive and the coefficient on the interaction term between the book-to-market ratio and leverage is negative.
Both coefficient estimates are statistically significant. This result indicates that firms with more growth opportunities use derivatives more, and even more when they also have a greater leverage ratio, which is consistent with the predictions of Froot et al.
On the other hand, as Model 2 reports, firms with weak governance use currency derivatives for different purposes. Results show that such firms use derivatives less when they have a greater degree of currency exposure. The coefficient on the foreign sales ratio is negative and statistically significant at five percent. This indicates that weak governed firms use currency derivatives less when they have a greater degree of currency exposure, which is inconsistent with the use of derivatives for hedging.
Rather, it suggests that firms sometimes let their currency exposure unhedged, or hedged partially. In other words, they selectively hedge [Stulz ]. This finding is consistent with the findings of Allayannis et al. It is also consistent with Faulkender who provides on average evidence that firms selectively hedge their interest rate exposure. While these papers provide on average evidence that firms selectively hedge, I show that less monitoring of managerial activities is likely to result in selective hedging.
A negative coefficient on the foreign sales ratio is also consistent with the survey evidence that finds managers incorporate their subjective views into corporate hedging activities in the U. Thus, firms with weak governance appear to be passively speculating on currency movements on average. Model 2 also reports a positive and statistically significant coefficient on log dollar inside ownership, consistent with the findings of Tufano Since this variable is used as a proxy for the degree of diversification of managerial wealth, a positive coefficient suggests that managers in weakly governed firms use currency derivatives more when they presumably have a lower degree of diversification in their portfolios due to substantial shareholdings in the firm.
Results from this model overall suggest that when their activities are left unchecked, managers use derivatives differently. The finding that managers in weakly governed firms use derivatives consistent with managerial utility maximizing hedging theories could be interpreted as firms with weaker monitoring mechanisms setting up optimal compensation policies to better align the interests of managers and shareholders.
They allow managers to hedge as part of their compensation contracts so as to, for example, increase managers' willingness to take on risky positive NPV projects. On the other hand, firms with better monitoring mechanisms appear to be in less need for such use of derivatives. An alternative interpretation is that hedging due to managerial motives is unlikely to benefit shareholders, given that the link between managerial incentives and derivative usage in strongly governed firms is insignificant.
This explanation implies that a strong corporate governance environment provides effective monitoring mechanisms to ensure the proper use of derivatives. The coefficient on the interaction term between leverage and book-to-market ratio is positive and statistically significant at ten percent, which is inconsistent with the underinvestment hypothesis.
Model 3 reports regression results for the entire sample and has two objectives: 1 to compare the results with the former models and 2 to provide an out of sample test of the extant studies that focus on U. This model displays a positive and statistically significant coefficient on the log of the dollar value of managerial shareholdings. This finding suggests that managers use currency derivatives more when they have substantial shareholdings in the firm and hence poorly diversified wealth.
Firms also use derivatives more when they have a greater probability of financial distress as documented by a positive and statistically coefficient on the leverage ratio. This finding is consistent with Haushalter A one standard deviation increase in a firm's leverage ratio from its mean increases its extent of derivative usage by 1.
Firm size also appears to be an important determinate of firms' use of derivatives. The coefficient on log assets is positive and both statistically and economically significant. A one standard deviation increase in total assets from the mean increases the extent of derivative usage by 4. GDP per capita also has a positive and statistically significant coefficient. The positive coefficients on firm size and GDP per capita suggest that economies of scale, the cost of using derivatives, and their availability are important for firms' hedging activities.
The negative and statistically significant coefficient on the convertible debt ratio provides evidence that convertible debt is used as a substitute to hedging with derivatives in reducing bondholder related agency costs. Results in Model 3 are mostly consistent with the empirical literature. Such findings are interpreted in the literature as evidence of firms' use of derivatives to maximize both shareholder value and managerial utility. Variables used in testing shareholder value-maximizing hedging theories foreign sales ratio, leverage, market-to-book ratio, and the interaction term are important in firms with strong governance and variables used in testing managerial utility-maximizing hedging theories log dollar inside ownership and foreign sales ratio are important in firms with weak governance.
When no distinction is made in firms' motives to use derivatives between strong and weak governance, both groups of hedging theories are supported by the data to some extent as seen in Model 3. Overall, Table 4 provides compelling evidence that the strength of corporate governance influences how firms use derivatives. However, these results should be interpreted with caution as there can be potential endogeneity issues in these regressions.
In following sections I undertake more extensive tests to investigate the sensitivity of these results to alternative specifications and samples. Robustness 6. Endogeneity Above I have assumed that derivative usage is influenced by firms' ownership structures but not the other way around.
However, a firm's ownership structure may be influenced by its hedging policies. In general, ownership composition can be considered as the outcome of an optimization process in which it arises endogenously as a function of firm and country characteristics. In the context of hedging, firms may experience changes in their ownership structure, such as having a managerial blockholder, after they start a hedging program. Hedging allows managers to invest greater stakes in their firms without foregoing the degree of diversification in personal wealth by lowering firms' riskiness.
Thus, managerial blockholders and in general concentrated ownership may be more common in firms with hedging practices [Stulz ]. As a result, a firm's inside ownership structure may be endogenously determined by its financial policies. Similarly, hedging can allow firms to increase their debt capacity by reducing the probability of default associated with higher debt [Stulz and Leland ], which suggests that a firm's hedging and capital structure policies can be interrelated. In addition, there is empirical evidence that growth opportunities are related to capital structure policies and ownership structures [e.
Derivative usage can influence investment opportunities through their effect on the firm's ability to finance its investments. Thus, a firm's investment opportunity set may also be endogenously related to its use of derivatives. A test of endogeneity is warranted before estimating simultaneous equations.
I use the Durbin-Wu-Hausman DWH augmented regression test suggested by Davidson and MacKinnon to formally test for endogeneity between a firm's inside ownership structure and its hedging, capital structure, and investment policies. Thus, OLS estimates are inconsistent and instrumental variables are required to account for this endogeneity.
Finding good instrumental variables that are correlated with the level of inside shareownership and uncorrelated with firms' hedging activities is a challenging task. I use four variables as potential instruments to estimate the level of inside ownership in firms. Doidge et al. Second variable is a dummy variable that equals one if insider trading laws are enforced in the country of origin, zero otherwise.
This variable comes from Bhattacharya and Daouk and is likely to be correlated with investors' ownership decisions in the firm as the opportunity to exploit private corporate information may influence investors to become insiders. Third instrumental variable is accounting standards. A greater degree of disclosure is an important determinate of shareholders' investment decisions, and is less likely to affect currency hedging activities in a sample of ADRs.
I also use the return on assets as another potential candidate. I multiply estimated levels of inside ownership from this model by the stock price at the fiscal year end and outstanding number of shares to obtain predicted dollar values of inside shareownership.
In instrumenting firms' leverage ratios, I use tangible assets-to-total assets ratio, selling and administrative expenses-to-net sales ratio, plant and property expenses-to-total assets ratio, return on assets, creditor rights in the country, and whether the country has a bank-based system [e.
Regression results from this instrumental variable estimation are reported in Table 5 and first stage regression results for inside ownership and leverage are reported in Appendix B. I report coefficient estimates separately for firms with strong and weak governance and then for the entire sample as in the previous table. In particular, Model 1 shows that the coefficients on the foreign sales ratio, leverage, and market-to-book ratio are all positive and statistically significant in strongly governed firms.
Thus, firms with strong governance use derivatives in a way consistent with the value-maximizing theories of hedging. On the other hand, Model 2 shows that use of derivatives in weakly governed firms is positively negatively related to the log of the dollar value of managerial shareholdings foreign sales ratio , suggesting that firms with weak governance use derivatives in a way consistent with the managerial utility-maximizing hedging theories and selective hedging. These results are same as those reported in Table 4.
One major difference in results when the simultaneity of inside ownership structures and hedging and capital structure decisions is taking into account is that the coefficient on the leverage ratio becomes positive and statistically significant in weakly governed firms.
The coefficient on the market-to-book ratio also becomes statistically significant but negative, which is inconsistent with the predictions of Froot et al. If managers in weakly governed firms use derivatives to fund their pet projects as in the model of Tufano , then in equilibrium we may observe the use of derivatives by such firms to a lesser degree.
Next I examine the determinants of firms' use of currency derivatives for the entire sample. Model 3 shows that firms use more derivatives when they have a greater probability of financial distress, when their managers possess substantial holdings in their firms, and when they have lower investment opportunities.
Significance levels associated with firm size, GDP per capita, and convertible debt disappear in the simultaneous equation estimation. I also use the one year lagged values of all time-varying explanatory variables to reduce possible endogeneity within the model and jointly estimate the governance index and currency derivative usage in a 2SLS framework, and obtain qualitatively similar results.
Country-level External Governance Both internal firm-level and external country-level governance mechanisms can monitor managerial activities. As a robustness check, I replicate regressions in Table 4 with country-level governance mechanisms such as the existence and enforcement of investor protection laws as a proxy for the strength of governance. The main advantage of using country-level mechanisms is that regression results will be less likely to suffer from an endogeneity problem between corporate governance and derivative-related activities.
Such governance mechanisms are not under the control of firms and thus cannot be jointly determined with firms' use of derivatives. I construct a country-level governance index as mentioned earlier. Results from using this index are reported in Table 6. This table displays coefficient estimates separately for firms with strong and weak governance, respectively. Firms located in countries with a country-level governance index greater than the sample median are put into the strong governance sample and the rest are put into the weak governance sample.
I do not report the results based on the entire sample of firms because they are already reported in Model 3 of Table 4. Model 1 shows that firms located in countries with strong governance mechanisms use currency derivatives to a greater extent when they have a greater degree of foreign exchange exposure, expected financial distress costs, and growth opportunities.
These results are very similar to those reported earlier except for the coefficient estimate on the interaction term between leverage and book-to-market ratio. The coefficient estimate on this variable is positive and statistically insignificant. Model 2 shows that firms residing in countries with weak governance mechanisms use currency derivatives more when their managers hold less diversified portfolios documented by a positive and statistically significant coefficient on the log of the dollar value of managerial ownership.
All else equal, currency exposure does not appear to affect the use of currency derivatives in this sample of firms. Overall, Table 6 shows that firms with strong governance use derivatives consistent with the value-maximizing hedging theories and other firms use derivatives consistent with managerial utility-maximizing hedging theories and selective hedging.
The interaction between firm-level and country-level governance mechanisms is likely to be important [e. For example, the incentives of insiders for mismanaging firm risks may be reduced by a strict enforcement of investor protection laws. Hence, I also examine the interaction between these two corporate governance measures. Although the empirical evidence on whether these measures are substitutes or complements is mixed, investors are expected to suffer the most from governance-related problems when both firm-level and country-level governance mechanisms fall apart [e.
Other chair—CEO dissimilarities and similarities include gender gap, tenure gap, experience gap, shareholding gap, and same family which is a dummy variable set to one if the chairman and the CEO are from the same family. Supervisory characteristics are divided into internal and external supervision. Internal supervision characteristics include board meetings and supervisory board size.
External supervision characteristics include analyst's attention, institutional investors' attention, and media's attention. Experimental design, materials and methods 2. CEO power and the pay gap The impact of CEO power on its salary incentives is a hot topic in management power theory research. Thus, in this hypothesis, CEO power is an independent variable, and the pay gap between chairman and CEO is a dependent variable. According to the Finkelstein [2] method, seven variables are used to represent the characteristics of CEO power.
Based on factor analysis, three main factors from seven variables are extracted. The total contribution rate of three principal components is The combined scores of the three main factors are used to measure CEO power. CEO power's square i. It helps to observe the role of CEO power on salary incentives from another perspective, that is, CEO power can reduce the pay gap between the chairman and the CEO and widen the pay gap with other executives.
Chair-CEO age dissimilarity, CEO power, and the pay gap The impact of age dissimilarity on the pay gap between the chairman and the CEO and the moderating effect on the relationship between the CEO power and pay gap are the focus of our research. Therefore, we consider that the chair-CEO pay gap is positively related to age dissimilarity.
It also significantly weakens the impact of the CEO power on the chair-CEO pay gap, that is, cognitive conflicts caused by the age dissimilarity has a certain inhibitory effect on the CEO power. Thus, in this hypothesis, age dissimilarity is used as the independent variable as well as the moderating variable, and the pay gap between chairman and CEO is the dependent variable.
Chair-CEO age gap and Chair-CEO age ratio measure the age dissimilarity from the perspective of absolute value and relative value respectively. The method to measure the Chair-CEO age gap is the same as Goergen's [1] method, but the definition of the generational difference is somewhat different.
The definition of the generational gap as 10 years is mainly due to the following two considerations [9] : On the one hand, due to cultural and geographical differences, China's generational differences are usually measured by 10 years rather than 20 years defined in traditional sociology. Post s, post s, and post s became synonymous with generational differences.
If managers are the same age, they will have similar ways of thinking, values, and codes of conduct. On the other hand, restricted by the employment period and promotion, the age difference between the CEO and chairman of Chinese listed firms cannot be too great, especially, in state-owned and state-holding firms.
In private enterprises, with the development of modern corporate governance systems and professional managers, the firm's founders are more willing to let experienced and capable management and decision-making teams operate and manage the company.
Therefore, the age of the firm's decision-making and management team tends to be younger, the age gap becomes smaller. According to the distribution results of the chair-CEO age gap, These results illustrate that it is statistically significant that 10 years is more appropriate to describe the generational difference between the CEO and chairman of Chinese listed firms. In addition, the squared age gap i. These two variables are used to verify that the age dissimilarity is as important as its sign.
In addition, the absolute chair-CEO age gap is used with Chair younger to further test the effect of the sign of age difference. The reason is both the age dissimilarity and its sign will affect the pay gap. Firstly, chair-CEO age gaps are used as independent variables to verify the effect of age dissimilarity on salary incentives, while the absolute chair—CEO age gap and chair younger are used to confirm the impact of the sign of the age dissimilarity on chair-CEO pay gap.
Secondly, the interaction between age difference and CEO power is used to confirm the inhibitory effect of age dissimilarity on the relationship between CEO power and pay gap. Therefore, we consider that the co-working time between chairman and CEO will reduce the effect of age dissimilarity on the relationship between the CEO power and the chair-CEO pay gap, that is, the co-working time helps CEO to increase mutual communication and reduce conflicts with the chairman.
WTD is used as a categorical variable and divides the sample into good relationship group and poor relationship group. The sub-samples of the good relationship group and the poor relationship group accounted for It provides evidence that good relationships can reduce the cognitive conflict between the chairman and the CEO, leading to more compensation.
In the same way, we also consider that the higher managerial ability of the CEO reduces the effect of age dissimilarity on the relationship between the CEO power and the chair-CEO pay gap. CAD is used as a categorical variable and divides the sample into high-ability CEOs and low-ability CEOs in order to observe the impact of CEO ability on cognitive conflicts caused by age dissimilarity. It provides evidence that CEO with higher ability receives lower constraint from the chairman or board of directors and reward more compensation.
Robustness tests Heckman two-stage test is used to address the potential endogeneity issue caused by sample selection errors. Reform and opening-up is an important turning point in China's economic development, thus, the instrumental variable Age1, which is a dummy variable set to one if the chairman or the CEO was an adult 16 years old before , and zero otherwise, is established. It is used to reflect whether senior executives have experienced this special period and the impact of this experience on corporate governance.
Harjoto et al. Thus, board-CEO age dissimilarity i. The broad age gap is mainly the absolute and relative age difference between the CEO and average age of the board. Board-CEO generational gap is a dummy variable set to one if the age difference between the average of board and CEO is at least 10 years, and zero otherwise.
The generational gap between the chairman and the CEO Generational gap was found in 5. From the distribution characteristics of age differences, the board-CEO age dissimilarity also has similar statistical characteristics of the chair-CEO age dissimilarity. Thirdly, the most important endogeneity test consists of treating the Chinese Salary limitation Order as an exogenous shock and alters the optimal levels of monitoring.
Therefore, using Age2 as a categorical variable, the sample is divided into two sub-samples: Pre-pay curbs — and Post-pay curbs — The sub-samples of Pre-pay curbs and Post-pay curbs accounted for Based on the comparison of two sub-samples, we can compare the effect of age dissimilarity on salary incentives before and after the salary limitation order.
We use this method mainly to consider the following two aspects: First, although the salary limitation order is only for state-owned and state-controlled listed firms, due to China's special regulatory system and public opinion mechanism, this policy will inevitably affect the entire market. Second, because the existing compensation system and corporate governance are not completely matched, non-state-owned and state-controlled firms also hope to use this opportunity to reform the firm's compensation incentive plan to meet the implementation of national policies.
Declaration of Competing Interest The authors declare that they have no known competing financial interests or personal relationships which have, or could be perceived to have, influenced the work reported in this article. Footnotes Supplementary material associated with this article can be found, in the online version, at doi Supplementary materials Click here to view.
Goergen M. Mind the gap: the age dissimilarity between the chair and the CEO. Finkelstein S. Power in top management teams: dimensions, measurement, and validation. Demerjian P. Quantifying managerial ability: a new measure and validity tests.
ERIKAS PLACE CICERO INDIANA MENU FOR DIABETICS
It doesn't support groupwise calculations, so you could only use it to get separate Winsorized results for subsets of observations by writing a loop or using it repeatedly, neither of which you may want to get into right now. An important detail as earlier flagged in a thread cited above is that the latter command will support groupwise calculations. Also, the two commands don't have identical syntax, so the syntax of one won't work necessarily with the other.
I have to say that the mention of tabstat at best points to a way to tabulate the percentiles which are worth knowing but that command is not a way to Winsorize. Download and open Bankrupt. Calculate the Altman Z-Score for every observation using the equation and variables listed above. Drop all firms with the SIC Codes of and Find the mean, median, min and max winsorized Z-Score for the whole sample.
However, due to the similarity of the procedures I present both in this section. Trimming The packages I am going to describe are called trimmean and trimplot. They can be downloaded via ssc install trimmean ssc install trimplot Both procedures do not change or create any data; they just compute means under different conditions of trimming and display these in a table or a plot. Note that procedure winsor2 described below will create trimmed variables that are added to the data set.
You may indicate single values, several values value lists or starting and ending points with an increment. Thus, trimmean income, percent 0 5 50 will remove 0, 5, Note that removing 50 per cent on each tail will not be done literally; rather, the value 'in the middle', i. Likewise, trimmean income, number will successively remove , , and finally cases on each tail of the distribution and compute the means.
The following table was produced with the help of the command shown above with the percent option. The variable investigated is very skewed; more than 50 per cent of the values are exactly 1, the 75th percentile is 3, the 90th percentile is 13, and the maximum is almost Therefore, the untrimmed mean is much higher than any trimmed mean.
Winsorize in stata forex college bowl betting strategy
#7 DEMO: HOW TO WINSORIZE OUTLIERS?Objectives We aimed to investigate how the Mediterranean diet could influence circulating metabolites and how the metabolites could mediate the associations of the diet with cardiometabolic risk factors.
| Winsorize in stata forex | I use the Durbin-Wu-Hausman DWH augmented regression test suggested by Davidson and MacKinnon to formally test for endogeneity between a firm's inside ownership structure and its hedging, forex stata winsorize in structure, and investment policies. Firms can use derivatives for hedging or speculation, and sometimes they engage in selective hedging activities. Thirdly, the most important endogeneity test consists of treating the Chinese Salary limitation Order as an exogenous shock and alters the optimal levels of monitoring. Similarly, hedging can allow firms to increase their debt capacity by reducing the probability of default associated with higher debt [Stulz and Leland ], which suggests that a firm's hedging and capital structure policies can be interrelated. To the extent these variables are correlated with the strength of corporate governance and other explanatory variables, and the dollar value of managerial shareholdings cannot capture winsorize in stata forex risk preferences, previously reported results will suffer from an omitted correlated variable problem. This model predicts that firms with more costly external financing those with greater growth opportunities benefit the most from hedging. The significance levels reported in earlier regressions disappear in some proxies in Table 7 possibly due to a smaller sample size and the fact that the U. |
| Btc us equity market | 770 |
| Crypto comparison graphs | Results from these regressions are qualitatively similar to those previously reported regarding the role of corporate governance in determining firms' use of currency derivatives. The second group of robustness tests attempts to address the impact of omitted possibly correlated variables on results using a sample of U. As a remedy to a possible mismeasurement of firms' derivative positions, I use firms' decisions to use currency derivatives FCD user as an alternative measure of hedging activities. First, I find that the strength of corporate governance influences how firms use currency derivatives. Second variable is a dummy variable that equals one if insider trading laws are enforced in the country of origin, zero otherwise. Table 3 displays that the correlation between them is 0. We winsorize in stata forex winsorize the following data set: 2, 4, 7, 8, 11, 14, 18, 23, 23, 27, 35, 40, 49, 50, 55, 60, 61, 61, 62, |
| Pratos combinados tvg online betting | Firms also use derivatives more when they have a greater probability of financial distress as documented by a link and statistically coefficient on the leverage ratio. Secondly, the interaction between age difference and CEO power is used to confirm the inhibitory effect of age dissimilarity on the relationship between CEO power and pay gap. I first test whether a firm's decision to cross-list and its use of currency derivatives are made simultaneously. Tufano argues that hedging can allow winsorize in stata forex to freely pursue their pet projects by providing access to internal financing in more states of the world. Firms in these models always hedge in the best interest of shareholders. |
| Winsorize in stata forex | This positive correlation between currency derivative usage and currency exposure is also consistent with the notion that greater disclosure within the firm associated with strong governance increases the ability of managers to identify and effectively mitigate currency exposure. CAD is a dummy variable set to one if the CEO ability score is greater than the annual median of the industry, and zero otherwise. In general, assuming strongly governed firms are more likely to make value-maximizing decisions, I hypothesize that they are also more likely to use currency derivatives consistent with the value-maximizing theories of hedging. Experimental design, materials and methods 2. The winsorize in stata forex of the MDS with cardiometabolic factors were estimated to be mediated by acylcarnitines, sphingolipids, and phospholipids. Content validity of the MDS was confirmed with the inverse association with incident cardiovascular diseases and all-cause mortality in our previous work 2. |
| Winsorize in stata forex | 232 |
Cleared hot create your own cryptocurrency please, that
1 комментарии на “Winsorize in stata forex”
investing in penny stocks india